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3. CG-24-25

CG 24 25 - Amendment Of Limits Of Insurance

The CG 24 25 - Amendment Of Limits Of Insurance endorsement is a crucial tool within Commercial General Liability (CGL) policies. Its primary function is to modify the existing limits of insurance that are stated in the policy's Declarations page. This allows for specific adjustments to one or more coverage limits, such as the General Aggregate Limit, Products-Completed Operations Aggregate Limit, Personal and Advertising Injury Limit, Each Occurrence Limit, Damage To Premises Rented To You Limit, or Medical Expense Limit. The endorsement itself will typically include a schedule where the new, amended limits are clearly specified, thereby overriding the original limits for those particular coverages.

Classes of Business It Applies To

This endorsement is not specific to any single industry but can be utilized across a wide spectrum of business classes. Its application becomes particularly relevant in scenarios such as:

• Contractual Requirements: A business entering into a contract (e.g., a construction contractor with a project owner, a tenant with a landlord, a vendor with a client) is often required to carry specific minimum liability limits. If the standard policy limits are insufficient, the CG 24 25 can be used to increase them to meet these contractual obligations. For example, a small contractor winning a large municipal project might need to increase their Each Occurrence and General Aggregate limits from $1 million to $2 million.
• Changing Risk Exposure: As a business grows, expands its operations, enters new markets, or introduces new products/services, its liability exposure may increase. This endorsement allows the policy limits to be adjusted upwards to reflect this heightened risk. For instance, a manufacturer launching a new product line with higher potential liability might proactively increase its Products-Completed Operations Aggregate Limit.
• Specific Risk Mitigation: Sometimes, a business may identify a particular area of exposure where they desire higher limits, even if not contractually mandated. This could be due to past claims experience or a heightened awareness of certain risks. While some sources indicate CG 24 25 is specifically used for "Limited Fungi or Bacteria Coverage" to establish a sub-limit for such exposures , its broader definition as per the user's summary allows it to amend various limits. If used for a specific exposure like fungi, it would set a dedicated aggregate limit for those types of claims.
• Umbrella/Excess Liability Requirements: Insurers providing umbrella or excess liability coverage often require specific underlying limits on the primary CGL policy. If the existing CGL limits are below these requirements, the CG 24 25 can be used to raise them, making the insured eligible for the desired excess coverage.

Special Considerations

Several important factors should be considered when utilizing the CG 24 25 endorsement:

• Mid-Term Adjustments: This endorsement can be used to amend limits at policy inception or mid-term. Mid-term changes will likely result in an additional or return premium, prorated for the remainder of the policy term.
• Specificity is Key: The endorsement schedule must clearly indicate which specific limit(s) are being amended and what the new limit(s) will be. Ambiguity can lead to coverage disputes.
• Impact on Aggregate Limits: Amending aggregate limits (General Aggregate or Products-Completed Operations Aggregate) mid-term means the new, higher limit applies to the entirety of that policy period, unless otherwise specified. It doesn't just apply from the endorsement date forward for the calculation of the aggregate.
• Underlying Agreement Review: When limits are increased to meet contractual requirements, it's vital to ensure the new limits fully satisfy all terms of the agreement, including any requirements for specific types of limits (e.g., per project aggregate).
• No Broadening of Coverage Terms: It's important to remember that this endorsement only changes the dollar amounts of the limits. It does not broaden the scope of coverage, add new covered perils, or modify policy exclusions, unless it's specifically tied to an endorsement that introduces a sub-limit for a particular coverage (like the Fungi or Bacteria example).

Key Information for Agents and Underwriters

Agents and underwriters should be mindful of the following when dealing with the CG 24 25:

• Pricing Adjustments: Amending limits directly impacts the premium. Underwriters will need to rate the change based on the increased (or decreased) exposure. This typically involves applying increased limits factors to the base premium for the coverages being modified.
• Risk Assessment: A request to significantly increase limits, especially mid-term, may warrant a closer look at the insured's operations and loss history to understand the driving factors behind the request. Is it due to a new contract, a change in operations, or adverse claims experience?
• Adequacy of New Limits: Agents should counsel clients on selecting limits that are adequate for their risk profile and potential contractual obligations, considering both current and anticipated needs. Simply meeting a minimum contractual requirement might not always be sufficient for the insured's overall risk management.
• Documentation: All requests for limit changes and the issuance of the CG 24 25 should be thoroughly documented in the client's file, including the rationale for the change. The endorsement, once issued, becomes a legal part of the policy.
• Potential for Gaps or Overlaps: When coordinating with umbrella or excess policies, ensure the amended CGL limits align precisely with the attachment point of the higher-level policies to avoid gaps in coverage or unnecessary overlaps.
• Regulatory Compliance: While the form is applicable in all states, underwriters should be aware of any state-specific rules or regulations that might affect how limits can be amended or the minimums required for certain types of businesses.